Management and Organization Theory

Turnover

1- Clarify the differences between functional and dysfunctional turnover and provide thorough examples.

2- If you are trying to reduce turnover, what questions would you ask a terminating employee during an exit interview? List at least three questions and for each of them, explain what value the employees' answers would provide to the organization.

In 2016,74 percent of workers with a job were either actively seeking or open to a new job. Employee turnover is the loss of employees who voluntarily choose to leave the company. In general, most companies try to keep the rate of employee turnover low to reduce recruiting, hiring, training, and replacement costs. Not all kinds of employee turnover are bad for organizations, however. In fact, some turnover can actually be good. Functional turnover is the loss of poor-performing employees who choose to leave the organization. * Functional turnover gives the organization a chance to replace poor performers with better workers. In fact, one study found that simply replacing poor-performing workers with average workers would increase the revenues produced by retail salespeople in an upscale department store by $112,000 per person per year. * By contrast, dysfunctional turnover, the loss of high performers who choose to leave, is a costly loss to the organization. To minimize dysfunctional turnover, VoloMetrix, Inc. uses algorithms to identify so-called flight risks- employees who are gearing up to quit. Software examines anonymized data from employee emails and calendars to identify patterns of communication that indicate the employee is spending less time interacting with colleagues and attending only required meetings. The analysis helps the company predict a departure up to a year in advance, which is important, as the median cost of turnover for most jobs is 21 percent of the employee's annual salary. Employee turnover should be carefully analyzed to determine whether good or poor performers are choosing to leave the organization. If the company is losing too many high performers, managers should determine the reasons and find ways to reduce the loss of valuable employees. The company might have to raise salary levels, offer enhanced benefits, or improve working conditions to retain skilled workers. One of the best ways to influence is to link pay directly to performance. A study of four salesforces found that when pay was strongly linked to performance via sales commissions and bonuses, poor performers were much more likely to leave (that is, functional turnover). By contrast, poor performers were much more likely to stay when paid large, guaranteed monthly salaries and small sales commissions and bonuses